Thanks to Government measures aimed at cutting foreign currency denominated debt, Hungary has been spared HUF 1000bn of extra liabilities, the Minister for National Economy said on public television M1 earlier this morning.

As the Minister stressed, special attention is being paid to the changes of the Swiss franc-Hungarian forint conversion rate as the majority of forex mortgages in denominated in Swiss francs. The fixing of the franc-forint exchange rate, a statutory measure, has greatly assisted forex borrowers especially in light of the removal of the Swiss franc exchange rate cap. Under this scheme, exchange rates have been set at CHF/HUF 256 and EUR/HUF 309 and thus, as a whole, forex borrowers were spared of incurring extra debt totalling some HUF 700bn.

Mihály Varga emphasised that in comparison to 2010 the lower share of forex debt within the stock of state debt has reduced the costs of servicing debt by some HUF 170bn, while thanks to last year’s debt assumption of local governments these costs dropped by HUF 85-90bn. As a whole, the total amount spared for Hungary is some HUF 1000bn, he said.

“The consistent policy of cutting the level of debt over the past years has managed to alleviate this problem,” the Minister said adding that the Ministry for National Economy (NGM) has been closely observing inflationary processes and it has been recognized that some retailers are reluctant to reflect lower consumer prices in retail prices. “People are experiencing a trend similar to that of the pricing of forex loans: as soon as forint depreciated, monthly instalments were immediately increased, but when forint appreciated these were left unchanged,” he said.

Mihály Varga called the claim that the Sunday closure of shops will cut fiscal revenues by HUF 200-250bn and the number of jobs by 25-30 thousand “unfounded”. He said that the calculations of the National Association of Entrepreneurs and Employers (VOSZ) are based on the assumption that the Sunday sales turnover of retailers will entirely vanish, whereas this sales volume will be generated from Monday to Saturday. “Obviously, sales volume may fall somewhat, but it cannot disappear altogether, that’s nonsense,” he stated. He also pointed out the Government reckons with no retail job losses as there is a significant shortage of labour in the sector: currently 2500 jobs are vacant.

(Ministry for National Economy)